Surviving the Storm: The Vital Role of Entrepreneurs’ Network Ties and Recovering Capabilities in Supporting the Intention to Sustain Micro and Small Enterprises

Abstract

Micro and small enterprises (MSMEs) play a positive and significant role in developing economies by creating job opportunities and mitigating poverty; this necessitates their attention and focus, mainly during challenging times. Accordingly, this study explored the key factors contributing to enhancing entrepreneurial competency (EC) and the intention to maintain business continuity among MSMEs in Yemen during adverse times. A sample of 280 responses was collected from MSMEs operating diverse types of businesses in the capital of Yemen, Sanaa. The collected data were analysed using partial least squares–structural equation modelling (PLS-SEM), which is considered suitable for this purpose. The data collection process included an online questionnaire and a physical visit to the business locations of the business owners. The findings of the study reported that entrepreneurs’ network ties (ENT), as well as recovering capability (RC), positively and significantly influence the EC of MSMEs in the context of the study. Additionally, EC positively and significantly influences business continuity intention (BCI). Finally, EC partially mediates the relationship between ENT, RC, and BCI. The study concludes by providing recommendations and implications for policymakers.

1. Introduction

Business continuity and sustainability, especially among micro and small enterprises (MSMEs) during adverse times and in unstable contexts, have recently gained significant attention due to the positive role that MSMEs play in the growth and development of the economy [1,2]. Small and medium enterprises (SMEs) contribute approximately 60% to 70% of the gross domestic product (GDP) and total employment [3]; therefore, their importance to the economy cannot be ignored. Many factors can negatively influence the performance of businesses, such as terrorism and war; leading to declining purchasing power, increased transaction costs, disruptions in the supply chain, and heightened market threats [1,4]. These factors can demotivate individuals from developing new businesses or continuing existing ones.

Entrepreneurs must develop specific capabilities and leverage available resources to ensure better business outcomes and continuity. Business resources include financial, professional, knowledge and skills [5]. Resources are internal analytical units of business that contribute to building a business’s competitive advantage and are necessary for getting into an industry [1]. Resources can also include market attractiveness and other resources that contribute positively to a firm’s success and performance [6].

Entrepreneurial resources significantly influence a business’s success and performance [7,8]. More precisely, resources such as social capital (network ties) and internal capability influence start-up performance [7], and are considered intangible resources [9]. Most previous studies have investigated critical factors and resources that lead to entrepreneurial success [5,9,10,11]. Almost none of them examined the influence of selective resources on business continuity intention (BCI) during adverse times or in a developing country like Yemen. Despite the limited literature confirming the presence of networks in many markets, such as financial markets, their influence on performance must be clearly understood [12]. The gap in understanding networks also applies to how entrepreneurs’ network ties (ENT) and recovering capability (RC) impact BCI and entrepreneurial competency (EC) in conflict zones like Yemen, where MSMEs face notable challenges.

More precisely, research on the key drivers that motivate individuals to operate and make entrepreneurial decisions during adverse times is needed [1]. Limited research has been conducted on entrepreneurship in dangerous areas and under adverse conditions, and there have also been limited investigations of EC [1,13]. Inadequate research has combined ENT, RC, EC and BCI in an emerging country like Yemen. ENT and social networks are essential for developing new enterprises; nevertheless, the network concept is still poorly understood, confirming the need to investigate ENT and EC among entrepreneurs [14,15]. The available literature confirms the need to investigate key factors influencing the sustainability of MSMEs during adverse times; specifically, this study is a response to Ref. [9] call to continue investigating the influence of ENT on other entrepreneurial concepts.

Even though it has been acknowledged that ENT, EC, RC and BCI can help sustain and continue MSMEs, there is still a clear research gap in exploring how these factors interact in a conflicting context like Yemen. Yemen is considered one of the poorest Arab countries, with high unemployment, poverty, illiteracy, and inadequate infrastructure [16]. Yemen presents a unique and compelling case for this research because of the challenges that MSMEs face from the war since 2015 and internal conflicts among political parties. The conflict in Yemen has resulted in massive damage to the MSME sector, including the loss of assets used in MSME operations. Furthermore, many business owners have died or been injured. The war also resulted in the loss of customers and poor business demand, loss of skilled personnel, and unstable energy supplies and electrical services, limiting access to funding and other resources necessary for businesses to survive.

Additionally, about 26% of the total enterprises in Yemen have closed because of the war, and about 42% of the total MSMEs owned by women were closed due to weak resilience [16]. In Yemen, MSMEs comprise about 97% of the total enterprises [17]. Nevertheless, it is not easy to classify or find a unique definition of them. Still, Ref. [17] classified micro-enterprises as businesses with 1 to 3 employees, small enterprises with 4 to 9 employees, and medium-sized businesses with more than 9 employees and less than 51. Enterprises in Yemen encompass various sectors, including agriculture, manufacturing, fisheries, services, and oil and gas [18].

In Yemen, more literature is needed on MSMEs, particularly studies examining ENT, RC, EC, and BCI. A few limited literature studies include Ref. [19], which explored the influence of market orientation on the innovativeness of SMEs in Yemen and reported a significant influence on innovation. Another study by Ref. [20] investigated the benefits and barriers to e-business among SMEs in Yemen. Furthermore, a study by Ref. [21] investigated the influence of human capital on the connection between SME performance and customer relationship management (CRM), and found that customer focus and other factors are effective drivers of SME performance. They further reported that poor infrastructure, difficulties in adopting innovative technologies, poor technical support, absence of adequate or qualified skilled employees and difficulty obtaining finance hinder the SME sector. The study by Ref. [22] also noted a theoretical poor review of SMEs in Yemen and the sector’s challenges, but did not report any significant remedies for the sector’s weaknesses. Accordingly, this study specifically aimed to answer the following research questions:

(1)

Can ENT positively influence the BCI and EC of MSMEs during adverse times?

(2)

Is there a positive relationship between RC, EC, and BCI?

(3)

Can EC mediate the relationship between ENT, RC, and BCI?

This study provides evidence to policymakers on the significant role ENT and RC play in strengthening the EC of MSMEs as well as BCI in the context of the study. Therefore, there should be more focus on improving these factors among MSMEs to ensure maximum benefits and a higher level of ability to endure adverse times and ensure business sustainability.

The discussion above confirms that Yemen’s micro and small sectors face difficulties and challenges in sustaining their businesses. Therefore, this study proposes a novel conceptual model aiming to help strengthen the competencies of MSMEs via enhancing ENT and RC and sustaining MSMEs’ intention to continue their business during the conflict. This paper is organised as follows: Following Section 1—Introduction, Section 2 reviews the theoretical framework and proposed hypotheses. Section 3 presents the research methodologies, Section 4 describes the research analysis and results, Section 5 offers a discussion and interpretation of the findings, Section 6 presents overall conclusions, and Section 7 reviews study limitations and discusses future research directions.

2. Theoretical Background and Hypotheses Development

2.1. Theoretical Basis

This research is based on the resource-based view theory (RBV), which assumes that enterprises desiring to gain a competitive advantage must obtain unique, valuable resources to perform better than competitors [23]. These companies also need specific capabilities for the same purpose [9]. A business can achieve a competitive advantage from the capabilities and resources that are difficult to imitate. These resources include both tangible and intangible assets, such as skills, routines, processes, information, and knowledge [24].

The RBV theory suits MSMEs operating in conflict zones and under unstable business environments. The theory offers a framework that helps MSMEs deal with challenges and difficulties, enhance entrepreneurs’ EC, and direct them towards continuing their operations even during challenging times. Furthermore, in this model, EC refers to the skills, knowledge, and abilities entrepreneurs possess. These skills, knowledge and abilities are considered internal resources under the RBV. Entrepreneurs possessing these resources and competencies can effectively deal with challenges and difficulties and adapt to fluctuating environments, ensuring high confidence and self-efficacy, resulting in a higher intention to continue business, even during conflict.

Furthermore, ENT and RC function as resources for the business under RBV theory. In other words, entrepreneurs with higher network ties can easily access the information and resources needed for growth and business continuity. A strong ENT helps entrepreneurs survive and deal with challenging conditions. RC skills are also considered a resource for entrepreneurs. A high level of RC skills indicates that MSMEs can overcome obstacles, adapt, and sustain themselves during difficulties. Finally, it should be noted that, even though ENT and RC provide essential business resources, EC translates these resources into reliable results and better outcomes.

2.2. Hypotheses Development

2.2.1. ENT, EC and BCI

Business owners, in general, must search for different resources and manage them to help grow and sustain their businesses [6,9]. Among the essential resources that support individuals in their business is ENT, which, according to Ref. [9], is defined as direct and indirect communication and contact between entrepreneurs and partners of different types. Business owners with significant ENT make potential partners quickly; they establish relationships with different business owners’ enterprises [25] because those potential partners will believe that they can benefit from such relationships. According to Refs. [12,25], some ENTs provide enterprises with essential resources that enhance business, strengthening the EC of entrepreneurs by providing them with better business entry, access to business opportunities and valuable resources. In other words, individuals with diverse ENT can share knowledge and information with other firms and individuals, share capabilities, receive different available resources, meet the required funds and also maintain good relationships with suppliers and customers [9,25,26,27,28,29]. When entrepreneurs obtain such resources from diverse networks, they become more capable of handling shocks, more confident, managing multiple tasks, and dealing with uncertainty. Accordingly, this will increase their self-efficacy and confidence, pushing them towards continuing their businesses and maintaining their survival. In this research, ENT is defined as those associations an entrepreneur maintains with different people where they can obtain benefits, values, respect, and trust that ensure the continuous sharing and exchange of resources and knowledge. ENT also ensures entrepreneurs’ competencies, business success, and continuity.

Based on a literature review, limited previous research has been found that discusses ENT for starting and growing businesses [14,30,31]. Among the studies that have discussed the concept of ENT was the study by Ref. [9]. The study by Ref. [9] included a sample of 374 respondents from SMSEs. The findings confirmed that entrepreneurs with a high level of ENT could have more influence on the entrepreneurial success of their businesses than those with a low level of ENT. In another study conducted by Ref. [5] using data collected from 378 operating high-tech ventures in China and Singapore, it was reported that solid network ties lead to better resource acquisitions [32]. The study by Ref. [25] also investigated how enterprises start building their network connections and, accordingly, building future networks. Ref. [27] also explored the role of social structure in influencing the development or establishment of business alliances among enterprises. It specifically concentrated on how social networks provide essential information about potential partners’ reliability and capability. Moreover, Ref. [7] investigated the impact of external networks and internal capability on the performance of enterprises by employing a sample of 137 Korean technological start-up firms. The findings revealed that among different external networks, partnerships with venture capital firms influenced start-ups in the context of the study.

According to Ref. [25], ENT helps overcome liabilities, reduces costs, ensures better performance and increases the illusion of control [33]. Furthermore, Ref. [25] reported that ENT generally reduces uncertainty by allowing information exchange among individuals. Entrepreneurs with more developed networks tend to succeed more than those with less developed networks [14,34]. Networks benefit entrepreneurs, including the development of individual competencies [14]. In conclusion, this study argues that more personal ties among MSMEs lead to more ability to make informed decisions, acquire resources and overcome challenges, increasing the individual’s confidence and intentions to continue their business during conflicts and unstable periods. Accordingly, the following hypotheses are proposed:

H1. 

ENT positively influences EC among MSMEs during adverse times.

H2. 

ENT positively influences BCI among MSMEs during adverse times.

H3. 

EC positively mediates the relationship between ENT and BCI.

2.2.2. RC, EC and BCI

In an unstable and conflicting business environment, especially among MSMEs considered sensitive to economic and political challenges, it is essential to equip business owners with the necessary skills to adapt to challenges and develop strategies for dealing with them, such as developing RC. RC is an individual’s capacity to handle business losses without giving undue attention to negative feelings or emotional responses [35]. In this research, RC is defined as an entrepreneur’s capability to analyse past experiences, learn from them, deal with and overcome difficulties, possess a positive outlook, and remain enthusiastic and optimistic about the future. Entrepreneurs can learn from past experiences through sense-making and analysis of past moves that lead to failure or negative situations, and develop the necessary competencies to deal with conflict and challenges [35,36]. For MSMEs, it is essential to continue working and sustaining their businesses; entrepreneurs must first access their businesses without the challenges surrounding them to continue operation [37], emphasising the need for EC.

Empirical studies on how RC influences EC and BCI in developing countries, especially in conflict zones, are still limited and require further understanding. Further investigation is needed, especially on how entrepreneurs recover from previous failures [35]. An example of the previous literature about RC included examples such as the empirical study by Ref. [35] with a sample of 146 entrepreneurs. The study found that the presence of certain features, such as internal locus of control and entrepreneurial self-efficacy, positively affect entrepreneurs’ willingness to overcome past failure, learn from past and strengthen their RC. Another study by Ref. [1] in Afghanistan reported that entrepreneurs could still develop the intention to continue their businesses even under war conditions, provided they had enough resilience and adequate self-efficacy and belief. While RC provides individuals with the necessary skills and capabilities to handle challenges and difficulties, EC, on the other hand, provides individuals with adaptability skills and long-term ability to innovate, leading to better and more resilience of entrepreneurs and their businesses [13].

RC represents the ability of individuals to deal with complex scenarios during challenging times by equipping them with the necessary tools to help them overcome setbacks. Accordingly, those entrepreneurs possessing this capability can develop competencies that allow them to solve complex problems, make informed decisions and adapt to changing circumstances. Furthermore, developing RC allows entrepreneurs to learn from their experience and set adequate plans for future business continuation. Hence, the following hypotheses are proposed:

H4. 

RC positively influences EC among MSMEs during adverse times.

H5. 

RC positively influences BCI among MSMEs during adverse times.

H6. 

EC positively mediates the relationship between RC and BCI.

2.2.3. EC and BCI

EC is a collection of vital skills essential for succeeding in business that include but are not limited to individual motivations, personal characteristics and knowledge [15]. EC also includes motives, self-images, traits, skills, and social roles that positively contribute to an enterprise’s growth and survival [38]. EC provides entrepreneurs with a long-term ability to innovate, allowing them to recover from shocks and setbacks [13]. It also motivates individuals to continue operating their businesses despite stress and conflict. EC also assists in mitigating crises and disasters by encouraging higher resilience and sustaining the business’s life [13].

This research defines EC as an individual’s skills that allow them to spot available opportunities, become visionary and creative, solve complex problems, lead teams, and communicate effectively. These skills also prepare an individual to be knowledgeable about digital, financial, and economic aspects and to develop innovative products and services that deal with ambiguity and uncertainty efficiently and ensure business survival and continuity. Considerable research on the EC concept and its various aspects has been conducted; however, literature related to EC, ENT, and BCI is minimal, especially in conflict zones and developing countries. For example, the study by Ref. [13] sampled 220 MSMEs in Indonesia and found that EC positively and significantly impacts business resilience, underscoring EC’s role. Ref. [15] empirically investigated the EC of catering business owners and found that those catering business owners exhibited moderate to low levels of EC. Their level of EC included resources, actions, ideas, and opportunities. The study by Ref. [39] investigated critical EC among female entrepreneurs who want to grow in England. The findings reported their possession of four competencies—human relations, entrepreneurial, personal and relationship and business and management. Ref. [40] also evaluated the influence of EC on business success among MSMEs in Malaysia. They reported that EC strongly predicts business success and growth [3,41]. EC was also a good predictor of entrepreneurial intention [42,43].

This research contends that if MSMEs possess different types of EC, they can generate a higher level of self-confidence in solving complex problems, making informed decisions, planning for innovative products and services, and effectively managing and sustaining their businesses. Hence, the following hypothesis is proposed:

H7. 

EC positively influences BCI among MSMEs during adverse times.

2.3. Proposed Model

Figure 1 is a pictorial representation of the study’s conceptual framework. The study model comprised four constructs. ENT and RC are independent variables, BCI is the dependent variable, and EC is the mediating variable.

2.4. Operational Definitions of the Study Concepts

Table 1. Operational Definitions.

Concept	Operational Definition	Source
ENT	ENT is the associations an entrepreneur maintains with different parties in which they can obtain benefits, values, respect, and trust that ensure continuous sharing and exchange of resources and knowledge.	Ref. [9]
RC	RC is an entrepreneur’s ability to analyse past experiences, learn from them, deal with and overcome difficulties, possess a positive outlook, and remain enthusiastic and optimistic about the future.	Ref. [35]
EC	EC is an individual’s skills that allow them to spot opportunities, become visionary and creative, solve complex problems, lead teams, and communicate effectively.	Ref. [44]
BCI	BCI is the ability and intention of MSMEs to continue their business operations despite the challenges and difficulties they face in adverse times by leveraging available ENT and RC.	Ref. [35]

Source: author elaboration.

presents the operational definitions of the concepts of the study.

3. Research Methodology

3.1. Data Collection and Sample

This study has investigated the key factors leading to EC among MSMEs. At the same time, it assessed EC’s effect on BCI and whether EC can function as a mediator in these relationships. Deductive and quantitative research methods were considered suitable to answer these research questions and assess the study’s hypotheses. Accordingly, a sample of 280 respondents was collected from MSMEs operating various activities in various locations of the capital of Yemen. Sana’a is the capital of Yemen and hosts a maximum number of business activities. The sample included business owners, representatives of the businesses in charge of the businesses, or any other individuals who have the power and right to respond and can understand the contents of the questionnaire. The collected data were gathered through an online questionnaire and physical visits to the business locations of those MSMEs in the study context.

The type of sampling followed in the data collection process was convenience sampling, a non-probability sampling technique considered most appropriate for this research and its purpose. Convenience sampling was used due to the absence of any database or record for MSMEs in Yemen that could be used to trace and reach business owners. Furthermore, the continuous instability of the business market in the context of the study due to internal conflict and political instability leads to continuous MSME failure, making it difficult to find any records of MSMEs’ permanent physical availability.

Therefore, in such a situation, convenience sampling seems appropriate, as it also considers the researchers’ limited time and effort and allows easily accessible data collection [45,46,47]. Convenience sampling can also be used for qualitative and quantitative research [45]. The data collection lasted about two months, commencing in June 2023, and ending in August 2023. The questionnaire employed in the data collection was prepared depending on various authentic measures in the extant literature review. The data were analysed using PLS-SEM, considered adequate for complex models and small sample sizes [48]. The questionnaire items were originally in English, and the respondents had an Arabic background; hence, it was necessary to translate the questionnaire from English to Arabic before distributing it to the respondents. The questionnaire was also checked and validated by authentic academic professionals after being translated into Arabic. A pilot study of 15 respondents was conducted to ensure the study’s reliability and validity. The pilot study resulted in minor issues that were fixed, and they helped improve the questionnaire quality. The questionnaire was distributed to respondents to answer and maintained online for about two months.

3.2. Measures of the Study

This study adopted measures for its concepts from authentic validated sources with good reliability and validity. According to the model developed in this study, there are four concepts: ENT, RC, EC, and BCI. First, the questions used for measuring the concept of ENT were adapted from Ref. [9], and a sample of these items included “I have mutual trust and respect with my business partners”. Second, the questions employed in the RC concept were adopted from Ref. [35]. Examples of the questions employed include “I am strongly motivated to get better”. Third, concerning the concept of EC, the items used in that concept were adopted from the study by Ref. [44], and an example of these questions included “I am creative and visionary”. Finally, the concept of BCI was adopted from Ref. [35]; an example of the questions employed included “I am ready to do anything to restart/continue my business”. The questionnaire is attached in the Appendix A for more elaboration on the questions used in the study.

4. Analysis and Results

4.1. Descriptive Statistics

The study included 280 responses from MSMEs operating their businesses in the capital of Yemen, Sanaa. In this sample, 91.8% were male, and 8.2% were female. Regarding respondents’ marital status, 52.9% were single, 45% were married, and 2.1% were neither married nor single. Concerning the respondent’s ages, 65.7% were between 18 and 28, and the rest were between 29 and 39 and 40 to 50, respectively. Regarding educational qualification, the results showed that about 45.7% of respondents had secondary school certificates, 35% had bachelor’s degrees, 11.8% had primary school certificates, 2.1% had higher education, and 5.4% had diploma certificates. Furthermore, concerning the respondents’ business experience, 35% had between five and 10 years of experience, 34.6% had less than five years of experience, and 30.4% had more than 10 years of experience. Regarding the business types, about 55.4% of the respondents worked in the retail and wholesale sector, 31.1% in the micro and small crafts and industries, 10.7% in the service sector, and 2.9% in the small and micro agricultural business.

4.2. Data Analysis Approach

In this research, we employed PLS-SEM in the data analysis and bootstrapping to assess the proposed hypothesis. PLS-SEM requires two steps to ensure the proper complete analysis and satisfying outcomes: evaluating the measurement and structural models; each involves different statistical tests.

4.2.1. Measurement Model Analysis

The first step in the measurement model was to assess the reliability and validity of the study constructs. The first test checks the construct’s internal consistency and reliability. The tests used for measuring the internal consistency of the constructs are Cronbach’s alpha or composite reliability. Both Cronbach’s alpha and composite reliability should have a value of 70% or above to ensure that items are adequately related and represent the same constructs [48]. We then moved to the next step in the measurement model, evaluating the convergent validity using the average variance extracted (AVE). The AVE test checks the level of variance in the construct questions that are supposed to be explained by the concepts they measure. Our findings for both Cronbach’s alpha or composite reliability and AVE, as reported in

Table 2. Construct reliability and validity.

	Cronbach’s Alpha (CA)	Composite Reliability (CR)	Average Variance Extracted (AVE)
BCI	0.797	0.799	0.621
EC	0.867	0.873	0.484
ENT	0.737	0.744	0.560
RC	0.885	0.889	0.685

Source: compiled by author.

, show that the threshold is met except for one EC, which is close to 50% and, hence, constructs are reliable.

We then evaluated the reliability of the construct indicators, which indicate the contribution every single item makes to the whole construct. The threshold for indicator loading is 60%, especially in exploratory research [48,49].

Table 3. Construct item reliability.

	BCI	EC	ENT	RC
BCI2	0.780	0.417	0.485	0.449
BCI3	0.811	0.378	0.531	0.375
BCI4	0.797	0.383	0.438	0.345
BCI5	0.764	0.330	0.447	0.363
EC1	0.280	0.615	0.247	0.294
EC2	0.330	0.726	0.302	0.348
EC3	0.382	0.722	0.316	0.429
EC4	0.257	0.626	0.224	0.284
EC5	0.282	0.727	0.251	0.383
EC6	0.317	0.700	0.262	0.384
EC7	0.317	0.688	0.283	0.302
EC8	0.369	0.746	0.371	0.474
EC9	0.419	0.699	0.318	0.443
ENT1	0.359	0.412	0.694	0.328
ENT2	0.410	0.235	0.741	0.304
ENT3	0.561	0.277	0.813	0.343
ENT4	0.462	0.326	0.739	0.311
RC1	0.387	0.438	0.378	0.796
RC2	0.296	0.465	0.328	0.795
RC3	0.450	0.502	0.375	0.855
RC4	0.460	0.428	0.365	0.878
RC5	0.413	0.420	0.336	0.810

Source: Compiled by Author.

discloses that the loadings of all indicators used in the study met the threshold after removing the first item of the BCI, and hence, all items now met the threshold specified.

The discriminant validity of the study constructs was then checked. The authors checked how the study concepts are distinct from each other, achieved using the heterotrait–monotrait ratio (HTMT) test. The threshold for HTMT is that HTMT values should be lower than 85% to indicate the presence of good discriminate validity [48].

Table 4. Heterotrait–monotrait ratio (HTMT) matrix.

	BCI	EC	ENT
EC	0.565
ENT	0.778	0.514
RC	0.575	0.610	0.533

Source: compiled by author.

shows the HTMT values, which all met the threshold.

4.2.2. Structural Model Analysis

We examined the study’s potential multicollinearity in the structural model by checking the variance inflation factor (VIF) for both the inner and outer models. The collinearity test ensures that the study’s independent variables are not similar. The findings of this VIF test showed that all values for both the inner and outer models were below 5, which is the threshold held for not having multicollinearity in the study by Ref. [48]. We then tested the path coefficient and significance of the proposed hypotheses using the bootstrapping method with a sample size of 5000 and checked the study hypotheses’ acceptance or rejection.

Table 5. Path coefficients.

Hypothesis	Relationship	β	T Values	p Values	Decision
H1	ENT -> EC	0.225	3.462	0.001	Accepted
H2	ENT -> BCI	0.443	6.863	0.000	Accepted
H3	ENT -> EC -> BCI	0.042	2.149	0.032	Partial Mediation
H4	RC -> EC	0.448	7.260	0.000	Accepted
H5	RC -> BCI	0.195	3.221	0.001	Accepted
H6	RC -> EC -> BCI	0.085	2.909	0.004	Partial Mediation
H7	EC -> BCI	0.189	3.025	0.003	Accepted

Source: primary data.

shows the findings related to the proposed hypotheses (H1 to H7). The table shows that all proposed hypotheses have been tested and accepted, including the mediation hypothesis (H3 and H6). Further elaboration of the hypothesis results is presented in the Discussion section.

Once the testing of the hypotheses was completed, the results of the coefficient of determination (R²), effect size (F²) and predictive relevance (Q²) were checked. R² shows how much variance an independent variable can explain in the dependent variable, F² shows the level of influence exogenous variables have over endogenous variables, and Q² reports the predictive relevance of the study model. According to Ref. [50], the threshold values for R² are as follows: 0.026 indicates substantial prediction, 0.13 indicates moderate prediction, and 0.02 indicates weak prediction. The results of the study related to R² in

Table 6. Coefficient of determination (R²).

	R-Square	R-Square Adjusted
BCI	0.454	0.448
EC	0.338	0.333

Source: primary data.

showed that ENT and RC could explain about 33.8% of the variance in EC, and EC can explain about 45.4% of the variance in BCI.

Table 7. Effect size (F²).

	BCI	EC
EC	0.043
ENT	0.275	0.062
RC	0.045	0.247

Source: primary data.

shows the various effect sizes (F²) for the study constructs. The table shows that EC has a negligible effect on BCI (F² = 0.043), and ENT has a moderate impact on BCI (F² = 0.275), which underscores the importance of ENT in the enhancement of BCI among MSMEs and a weak effect on EC (F² = 0.062). Finally, RC had a negligible impact on BCI (F² = 0.045) and a moderate effect on EC (F² = 0.247), which underscored the significance of RC in developing EC among MSMEs. All of the above thresholds are according to Cohen’s guidelines [50].

We then check the predictive relevance of the model using Q²; the result confirms that all Q² values are greater than zero, proving that the model has predictive relevance. Common method bias (CMB) was also checked to determine the variance in the data used, due to the methods used to collect the data [51]. The CMB test is conducted using Harman’s single-factor test; this method uses exploratory factor analysis with all construct items used in the study. The findings from Harman’s single-factor test reported that the first factor extracted about 31.8% of the variance in the study data, below the threshold of 50% specified by Ref. [51], indicating the absence of CMB in the study data.

It was also essential to examine the model fit in this study. Therefore, both the standardised root mean square residual (SRMR) and normed fit index (NFI) were evaluated, and the results were reported. According to the results obtained, the SRMR value is 0.069, less than the threshold value indicated as 0.08 according to Ref. [52] and confirms a good model fit. Furthermore, the value of NFI was 0.777, which is also below the threshold value of 0.90 according to Ref. [53], confirming a good fit for the model.

Table 8. Correlation matrix.

	BCI	EC	ENT	RC
BCI	1.000	0.480	0.606	0.488
EC	0.480	1.000	0.418	0.545
ENT	0.606	0.418	1.000	0.431
RC	0.488	0.545	0.431	1.000

Source: primary data.

reveals the correlations among the variables of the study. The table shows that BCI and ENT have the most remarkable correlation (0.606), confirming the existence of a solid positive correlation among them. In addition, EC and RC had a moderate correlation of 0.545. Finally, the correlation between EC and BCI was 0.480 and between RC and BCI as 0.488, which is also mild. The structural model representation is shown in Figure 2.

5. Discussion

5.1. Interpretation of Findings

This study investigated the role of ENT and RC on EC and BCI among MSMEs in Yemen, a conflict zone, and reported different findings. Hypothesis H1, which evaluated the influence of ENT on EC, reported positive and significant results (β = 0.225, p < 0.05), confirming the role that ENT play in influencing EC among MSMEs. In other words, those entrepreneurs capable of maintaining a good level of ENT will have more opportunities to acquire higher EC that include skills, knowledge, and abilities. This will allow them to manage challenges during conflict times and ensure better access to resources and good relationships with stakeholders and business partners. Therefore, H1 is supported by the argument of Refs. [9,25,32].

Hypothesis H2 proposes that there is a positive relationship between ENT and BCI revealed a positive and significant finding, i.e., (β = 0.443, p < 0.05) and indicating that when individuals possess good network ties with different environments and parties, they leverage the available business resources such as funds, technical support, and access to resources of various types, increasing the individuals’ confidence level. Once individuals’ level of confidence increases, it will allow them to deal better with setbacks and confidently plan for future growth and business continuity. Therefore, H2 is supported by the arguments of Refs. [6,12,25].

Hypothesis H3 attempts to determine if EC can positively mediate the relationship between ENT and BCI, or if it is not reported as partial mediation (β = 0.042, p < 0.05). The H3 finding indicates that individuals with good ENT can improve their EC as they will be able to learn and gain from their network ties surrounding them with the necessary knowledge, skills and abilities to increase their confidence and ability to deal with challenges and solve complex problems during challenging times. Furthermore, while ENT positively and significantly influences BCI, part of this influence is channelled through EC. Thus, both ENT and EC are essential for entrepreneurs and should be enhanced.

Hypothesis H4 assumed the existence of a positive relationship between RC and EC, and a significant finding was obtained (β = 0.448, p < 0.05), confirming the pivotal role RC plays in enhancing and developing EC. In other words, RC plays a role in the development of EC among MSMEs as individuals with a higher level of EC can quickly learn from experience, analyse past incidents, evaluate failure if present and accordingly develop the needed competencies that will help them handle hurdles, solve complex problems and make the right business decisions, consistent with previous arguments of Refs. [1,35,36].

Hypothesis H5 assumed that RC can positively influence BCI. Once assessed, the finding revealed positive and significant results (β = 0.195, p < 0.05). The H5 finding confirmed that individuals possessing recovery skills such as learning from experience, adaptation, and possessing a positive look for the future can increase their intention to continue their business because these skills can increase the level of confidence and belief in entrepreneurs’ abilities to handle any future challenges, consistent with previous arguments discussing these issues [35,36].

Hypothesis H6 questioned whether EC can mediate the relationship between RC and BCI and confirmed the existence of partial mediation (β = 0.085, p < 0.05). It should be noted that while RC positively influences BCI, part of this effect is channelled through EC, emphasising the importance of both EC and RC in motivating entrepreneurs to continue their business and sustain them during challenging times. Those entrepreneurs with good RC can have more EC, leading to good intentions for business continuation. The result of H6 is consistent with the previous argument [1,35,36].

Finally, Hypothesis H7 examines the relationship between EC and BCI. H7 reported a positive and significant connection between EC and BCI (β = 0.189, p < 0.05). This result confirms that individuals with a more substantial level of EC can develop a better ability to innovate, recover from shocks, develop better knowledge, have more motivation, develop a better self-image, and have better social roles, hence continuing to operate their businesses with less worry. Therefore, H7 is consistent with Refs. [13,38].

It is important to note that while ENT, RC and EC proved to be good predictors of BCI, more is needed to ensure that intention can be converted into real action. Intentions and psychological readiness can only sometimes allow entrepreneurs to continue their businesses due to external factors, such as the absence of funds, market and business opportunities, and challenging economic conditions.

5.2. Practical Implications

This study is one of the limited studies focusing on ENT, RC, EC, and BCI among MSMEs in developing countries during adverse times. It is considered significant because it emphasises the role of ENT and RC in building and enhancing the EC of entrepreneurs during challenging times, ultimately motivating MSMEs to continue their businesses. This research is vital as it notifies MSMEs on the areas that need to be improved through receiving the required training related to recovering capabilities, skills and network ties, which help entrepreneurs survive and maintain their businesses. This study also acts as a guide and platform for policymakers and development agencies. It can help them design necessary plans and initiatives that enhance business survival in unstable areas by focusing on building recovery skills and network ties among entrepreneurs and guiding them in dealing with adverse conditions.

When entrepreneurs understand the factors leading to higher EC and business survival, they can easily design necessary strategies and business plans to maintain resilience and continue operating during the conflict. This study also assists entrepreneurs in managing crises effectively by equipping themselves with the tools needed to deal with challenges and recover from them smoothly. The study’s findings can also guide financial institutions and investors in classifying those with high recovery skills and higher network ties as low-risk businesses and accordingly finance them.

5.3. Theoretical Implications

Because this study addresses factors driving EC and enhancing BCI among MSMEs during times of conflict, it is considered one of the novel efforts contributing to the literature in this regard. Furthermore, this study is considered one of the limited studies applying the RBV theory to MSMEs in developing countries and conflict zones like Yemen. Using such a theory in such a context can allow for a clearer picture and understanding of how ENT and RC drive EC and business continuity among MSMEs. This study provides empirical evidence of the model’s applicability in the study context. It confirms the importance of ENT and RC in building EC and strengthening their confidence in continuing their businesses even under conflict and complex business environments. This also confirms that while ENT and RC can enhance BCI, this enhancement is translated via EC. This research further allows future researchers to investigate other factors contributing to business survival in the connecting zone, such as cultural and institutional support. This study adds new theoretical insights into the limited literature on MSMEs in Yemen and the factors contributing to their growth and development.

6. Conclusions

MSMEs are essential for economic development, particularly in developing countries, as they contribute about 40% of the total GDP [54]. Nevertheless, MSMEs are vulnerable and are negatively affected by shocks and conflicts. Hence, it is essential to understand critical factors that enhance MSMEs’ EC and help them continue their businesses even during conflict and challenging times [1,4]. Previous studies have identified several factors contributing to improving business continuity; nevertheless, a limited number of them have focused on factors such as ENT and RC in developing countries and during conflict times [14,15]. Accordingly, this study investigated the influence of ENT and RC on enhancing EC and BCI in an unstable country such as Yemen. The study gathered a sample of 280 MSMEs operating several types of businesses in the capital of Yemen, Sanaa, to test the proposed model. The collected data were analysed using PLS-SEM, and varying results were found.

The results showed that ENT and RC can positively influence EC and BCI. It was further reported that EC can partially mediate the relationship between ENI, RC and BCI. In addition, EC can positively influence BCI. Finally, since positive results were found, the focus should be directed towards enhancing the ability of entrepreneurs to develop network ties and recovering capabilities that help them gain more skills, knowledge and capabilities essential for improving the intention to continue business during challenging times.

7. Limitations and Future Research Directions

Like other research efforts, this study has some limitations. The first limitation is using convenience sampling when collecting data, a non-probability sampling method that makes it difficult to generalise the results. Furthermore, the collected sample is relatively small, which may influence the generalisation of the findings. For future studies, researchers may concentrate on enlarging the study’s sample to cover larger populations or different regions and may conduct comparative studies of other countries. It is also recommended that future studies be based on longitudinal studies and focus on specific sectors of MSMEs, such as production or services.

Despite providing new insights and valuable contributions to the MSME field regarding the relationships between ENT, RC, EC, and BCI, a significant limitation still must be declared: the absence of financial ratios in the developed model. Financial ratios are an essential concept developed by Ref. [55]. He and his colleagues also developed other research on SMEs and financial ratios in Refs. [56,57]. The work of Altma emphasised the importance of financial ratios for SMEs and their success and failure; hence, financial ratios should be addressed. Ref. [57] confirms the presence of different financial ratios, including profitability and liquidity ratios, that contribute to SMEs’ continuity and sustainability and should be considered when discussing SMEs’ failure success and continuity. Furthermore, while this study addresses non-financial concepts, such as ENT, RC, EC and BCI, future studies should ensure combining models of financial ratios with other non-financial concepts to develop a more comprehensive understanding of business continuity among MSMEs. The exclusion of financial ratios might limit the alignment of the study with established business failure prediction models.